Foreign Currency Inverse ETF Funds
Investors interested in shorting the dollar against foreign currency can purchase Inverse Foreign Currency ETFs. This ETF’s performance is based on the inverse relation against its benchmark. The currency benchmark will be the US dollars performance against a particular foreign currency. When the dollar declines in value against this foreign currency then an investor will show a profit and vice versa when the dollar increases in value.
Investors seeking an inverse Currency ETF are looking to hedge their portfolio to lock in gains or expect a market correction/decline in the currency market. During times of uncertainty or weakness in the economy, the value of the US dollar usually will decline and vice versa when foreign economies perform poorly. As the dollar weakens, foreign investors are able to purchase more goods and services for a lower amount due to foreign exchange rates.
Investors also can purchase an inverse currency ETF with leverage, which allows for greater profits with less capital. Leverage also means that there is more risk involved, since the investment can lose 2x (200%) the value of capital invested.
Available Inverse Foreign Currency ETF
Proshare Ultrashort Euro (EUO)
Proshare Ultrashort Yen (YCS)